Inflation came in lower than expected this week and the S&P 500 took the opportunity to skyrocket and never looked back.
As a result I managed to close a few trades that I've been rolling for a profit (one from way back in September 2021!).
On the other hand, that leaves this portfolio super light on trades now. I'm left with 3 open positions in play.
Unfortunately this is one of those times where I just have to be patient and wait for an opportunity.
Initiating too many new trades when the market is climbing and volatility is low is a recipe for disaster.
In any case, lots of position updates this week, here's what we'll be looking at:
WBA & SCHD closed for a profit
In WBA, I sold 2 contracts for $1.22 each, and each contract was closed for $0.15. So that's $1.07 profit per contract (or $107 - remember 1 contract = 100 shares), a total of $214 overall. This represents 88% of max profit.
SCHD was initially opened for $110, rolled once for $61 and closed for $15 as well. That's $156 profit out of $171, or 91% of max profit.
I usually look for between 50% and 75% of max profit, so both trades were very profitable.
This means this account has no positions expiring on Expiration Friday next week - I'll have to look for more content!
If you want to read more about my thoughts behind setting the $15 price target instead of leaving the trades to expire in 7 days, check out last week’s post.
New trades in JNJ & NKE
This week I put on 2 new trades, of which one already closed!
I sold a put in Nike (NKE) for $90 on 9 August, by 11 August that option was trading at $40.
55% of max profit in 2 days? You bet I locked in that profit and ran.
For Johnson & Johnson (JNJ), I sold a $160 put expiring 16 September for $1.45.
I've actually been trying to get assigned shares of JNJ the whole year and have made 5 trades collecting $1,075 so far, but no luck on the assignment front.
Because I'm trying to pick up shares, I will leave this trade to run until there are at least 14 days left before I consider managing the trade.
If I do get assigned, it’ll cost me $16,000 for 100 shares, less the $1,220 total premium collected so far.
That works out to a cost basis of $147.80 per share, and I would be more than happy to own JNJ at that price, especially when you consider it hasn’t slipped below $158 all year.
Trade update - ABBV & KMB
These trades were put on as a collection together with PG. Last week I updated that PG was already closed at 50% of max profit and detailed the thoughts behind the original trade entry below.
Just to recap, we have ABBV at Friday’s close of $142.60
Circle 1 shows the trade I have: I sold one put at the $135 strike expiring on 16 September.
Circle 2 is how much one option is currently worth, $1.35. Or actually $135 - because remember each option contract controls 100 shares, so the number needs to be multiplied by 100.
Circle 3 is the original credit received - $2.05 or $205.
Recall that last week ABBV was trading at a $110 unrealised loss, that’s swung to a $70 unrealised gain this week. The effects of low volatility are clear!
There’s still a lot of time to go in this trade with 33 days to go, I will leave it be.
In KMB, things are a bit more interesting.
It’s trading at $67 vs an initial credit of $220.
This means I could lock in a profit of $153, or 70% - well within my usual profit target of 50% - 75%.
However with the low volatility, I think I can risk trying to squeeze more out of this trade, and I shifted my order to close it to $44, or 80%.
If this bites me in the butt, please feel free to tell me that’s what I deserve for being greedy!